Public Option

I was thinking about arguments for and against the “public option” in health care reform. The argument in favor of a public option is that a non-profit national health insurance option would set an upper bound on premiums and prevent collusion between private insurers. The private health insurance industry has a history of inefficient resource management that spends 30% of premiums on overhead (including high executive salaries). The industry also prioritizes profits over patient well being in its efforts to avoid paying claims and over-pricing coverage for anyone that develops an ongoing health condition.

The argument against the public option reasons that the private insurance industry will not be able to compete with the public option, so the insurance industry will evolve into a single payer system run by the government. From that point public option opponents go on to argue that a government run single payer system is bad.

Spelling out the arguments for and against the public option in this way shows that both sides of the debate actually agree that a public option would more efficiently finance health care than private insurers do currently. The argument then becomes whether or not private insurers will be able to evolve and compete with an opponent that will not collude on price, the costs and benefits if we evolve toward a centralized single payer system; and if the government does not provide a private option, then how can we trust private insurers to change their behavior and become more efficient and more focused on patient well being.